Retail investors in the Middle East’s are increasingly eying art as a standalone asset class owing to the market maturity and support infrastructure that is now in place, according to experts.
Speaking at a forum organised by Christie’s and Zurich, industry experts said that aside from a well established group of high-net worth individuals, the region is seeing a rise in investors who are confident of spending $20,000 and above on pieces of art.
The panel added that a rise in art investment support services such as the Art Net pricing tool and a proliferation of ways to participate in the market, from purchasing art directly from studios, galleries and auction houses through to investing via specialist art funds has spiked investor interest.
According to experts, Middle Eastern art is an emerging asset class with a corresponding risk and reward profile. They said that though investors might have to accept price volatility, it is much less than assets such as gold. It is also possible to provide more accurate pricing benchmarks since the market has matured, the panel said.
“Art is a globally recognised alternative asset class that has grown in popularity in this region to become a viable component of a diversified portfolio of assets,” said Salma Shaheem, head of The Fine Art Fund group’s Middle East division.
“Like any asset class, however, investing in art requires thorough research and professional advice.”
Experts also emphasised the importance of protecting art works to retain their value. Though theft and fire are the risks most associated with art, simple accidental damages such as water dripping from air conditioner could also affect the price of art piece.
“Like any asset, art needs to be protected to ensure it retains its value,” said Brian Reilly, CEO for Zurich’s general insurance business in the Middle East.
“Yet just as the market for art has developed considerably in recent years, so too has the specialised art insurance industry. Thanks to the increasing availability of professional risk management advice, collectors are also much better informed about keeping their artworks safe while at home or in transit.”
Experts also suggested that art investors should research thoroughly before purchasing an art piece and prepare for a long-term investment.
Auction house Christie’s netted a total of $18.4 million last year from Middle Eastern art sales, up 30 per cent form 2012.
The London-based auction house is planning to put under hammer around 200 pieces of art works and luxury watches, estimated to be worth $7.5 million, on March 19.
The artworks have a combined pre-auction value of $5.5 million, while the watches carry a pre-sale estimate of $2 million.